ameritrade is forcing me to cover a short

Discussion in 'Retail Brokers' started by 151, Oct 20, 2008.

  1. It still seems like there is a lot of confusion from people about what a PUT option is, so I will say it again.

    "A put option grants the right, not the obligation, to sell, not short sell, an instrument at a predetermined price."

    Everyone needs to take a giant step back from their trading systems, their strategies, and their complex ideologies to grasp this concept. You can call GTS an asshole, but I can understand the frustration with people who want to blame everyone else for their misunderstandings.

    My interpretation of 151's situation is he initially bought PUT options on Ford as a leg on some strategy he likes to implement. However, sometime before expiration he decided he would like to short Ford shares and modify his strategy. He believed that letting his put options expire would grant him the right to short sell a number of shares at that price and that TDA would be obligated to loan an equal number of shares as he had PUT options on.

    Here's the problem - expired PUT options and the short sale of shares are two different things. Expired PUT options DO NOT entitle you to enter a short sale position. An option is a contract, a short sale is a loan. See the difference?

    If you are still confused, I would highly suggest you read the primer pamphlet - Characteristics and Risks of Standardized Options. (http://www.optionsclearing.com/publications/risks/riskchap1.jsp) TDA requires you to certify you have read this before you can trade options. Consider reading it again.
     
    #41     Oct 22, 2008
  2. GTS

    GTS

    I love cowards that go through the trouble of creating a new alias to hide behind for a single post - it warms my heart to know I got under your skin. :D
     
    #42     Oct 22, 2008